Ford says it will need more expansion in China after 2015 goal

Oct. 9, 2013

David L. Schoch

Written by

Detroit Free Press Business Writer

Workers assemble vehicles on an assembly line at Ford factory in Chongqing, China. Ford intends to have 24 factories in Asia by 2015, but that might not be enough, a Ford executive said. / Associated Press

Ford Asia Pacific chief Joe Hinrichs far left, and Ford Motor Co. President and CEO Alan Mulally, third right, with local government and company officials attend the Ford Hangzhou project groundbreaking ceremony in Hangzhou, China, Wednesday Aug. 29, 2012. Ford Motor Co. is developing a lower-priced small car for the Chinese market but has no plans to start a separate, cheaper brand in China as rivals General Motors and Volkswagen have. (AP Photo) / AP

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Ford likely will need to build even more plants in China when the current expansion is complete in 2015, said Dave Schoch, president of Ford Asia Pacific.

Last year, Ford had 14 vehicle assembly and powertrain plants in Asia. By 2015, that number will grow to 24. Four of the new assembly plants and three new engine plants are in China.

But that might not be enough to meet domestic demand, said Schoch, who met with reporters today in Dearborn.

The expansion is just to keep up with domestic demand in the world’s largest automotive market; there are no plans to export those vehicles back to the U.S., he said.

The global auto industry has grown from 58 million vehicles in 2002 with 3% in China to 82 million in 2012 with 24% in China. By 2020, worldwide sales are forecast to reach 109 million vehicles — 32 million in China alone.

“China would be more than North America and Europe combined,” Schoch said.

Ford is still playing catch-up in China, where General Motors and Volkswagen remain the largest western players, selling more than 3 million vehicles annually. Japanese automakers’ sales have fallen following a dispute between the two countries over some islands.

So far Ford has capitalized on the fallout from that diplomatic clash, selling more than 600,000 vehicles in China this year through September, up 51% from a year earlier.

If Ford exceeds 900,000 sales in China this year, it would surpass Toyota and Honda and creep up on Nissan.

Ford showrooms now offer a dozen models — up from four a year ago — including a full lineup of SUVs.

The other best sellers are premium vehicles, and Ford will introduce Lincoln in the fourth quarter of 2014 with vehicles exported from North America. So far, about 11 dealers have been selected. Four will be ready to go a year from now.

Ford has about 400 passenger car dealers and 200 commercial truck dealers in China with plans to double that by 2015.

The automaker had a 2.5% market share in the first quarter of 2012 and 3.2% by the end of the year. Schoch said Ford’s goal is to capture 5% of the Chinese market by the end of this year.

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Ford’s production capacity in the region will expand from 1.8 million vehicles last year to 2.9 million in 2015. It is also exploring the possibility of launching an indigenous brand of lower-cost vehicles with its Chinese partner, Changan.

John Fleming, head of global manufacturing, said Monday that Ford plans to build 8 million vehicles a year around the world by 2017, up from 6 million today.

China will account for much of the growth. One potential headwind is the possibility that rising fuel costs will slow sales in China, because it imports much of its fuel, Schoch said.

In the larger Asian region, Ford has sold almost 948,000 vehicles through September, up 31%, and is on track to hit a record 1 million next month, Schoch said.

“I’m pleased with the progress we’re making. I’d like to be going faster,” he said.

As for other Chinese automakers exporting their vehicles, Schoch said to watch out for Great Wall Motors, a maker of SUVs.